Forex Trading Information: Beware of Frauds

For new traders this forex trading information is critical in starting off your trading career on a clean slate. Forex Frauds!

Posted in Forex Trading, Submitted by Trading Critic on Sat, 2006-04-08 06:49.

You may have been solicited to trade “foreign exchange contracts� or “forex�. For new traders this forex trading information is critical in starting off your trading career on a clean slate. Frauds are infiltrating the forex trading grounds and it is critical to your success to be aware of the frauds that abound the markets. Be aware of these frauds being perpetrated in the financial markets to safeguard your forex trading. So when you consider and shop around for a forex broker be sure that this forex trading information serves you well.

There has been a boom in the financial industry in the last few years and the numbers and complexities of financial investment opportunities are growing exponentially. And along with this explosive growth, so are the scams associated with the forex currency trading. But also be aware that along the lines of the forex trading information that you come across that many forex trading firms are also legitimate – it is those companies that are defrauding traders that you should be cautious about.

As a budding trader you are vulnerable to the fact that these companies attract customers through the normal routes of communication: advertisements in the paper, radio or internet. The advertisements will almost always tout forex trading information results claiming high return, low risk investment opportunities in the forex trading arena. Of course as anything, you should be always aware and skeptical if anyone offers you high profits with minimal risks. There is no such thing in any market. High returns and high risk always go hand in hand. Be wary, if the firms promote their services as such.

When you are shopping for a forex broker be sure that you follow up and request and research forex trading information about the company: Are they registered with your government’s regulatory body? Are they certified and registered to be a securities dealer or broker? Thye may also be a subsidiary of a bank or an insurance firm – always ask before you sign the dotted line.

After checking if the company is registered and certified to act as your broker and dealer in foreign currency exchange you should be wary of the following warning signs of fraud. As you delve into your forex trading information research as well as researching your other investment opportunities always be wary of those that sound too good to be true. There is no such thing as a free lunch. Avoid companies that claim to guarantee profits as in many cases those claims of massive profits are untrue and only serve to attract the greedy. Also any promise or guarantee with little or no financial risk would truly raise a few eyebrows of some professional traders. There is always risk in every trade – most of the time it is up to the trader to limit that risk, risk reduction rarely is the job of the broker (although they do provide risk reduction vehicles that traders can use).

As you can see simply signing up to a service and trading is not an easy path. You must research your forex trading information regarding your chosen provider before actually beginning to trade. You must also understand what margin trading encompasses; it loosely means that with a small deposit you can control far larger amounts of money. You must fully understand the concept and be prepared for any losses that may occur. Also be wary of companies that claim you can or should trade the ‘interbank market’. The term refers to a loose network of currency transactions negotiated between financial institutions and large companies.

If you’re still reading that means you are really dedicated in your forex trading information research. Which also means that you don’t take this issue lightly and you are VERY serious in succeeding in your forex trading. That’s good! You are being very thorough. So we shall keep running down the list of stuff you should check before signing up to the forex provider. Be cautious of sending or transferring cash on the internet or mail. Take not of where the company is located and their accreditations. Be warned that once the fiund transfer has occurred it is very difficult or impossible to recover your invested funds. Be especially cautious with companies who don’t disclose information about themselves as well as their background. There is no reason for legitimate forex dealers to hide behind smoke and mirrors.

So remember, when a forex dealing company advertises their services or solicits their services to you always be wary of high pressure tactics asking you to join up and participate in their services. Be skeptical about offshore companies vying for your business and avoid companies guaranteeing any returns or no risk. Researching forex trading information takes a lot of dedication, but with a little due diligence and patience, you will surely succeed. Good Luck!

George Polizogopoulos is a staff writer for ForexTradingHQ.com and MyShareTrading.com, an information hub for traders: forex, shares, derivatives, CFD's. MyShareTrading.com also provides free blogs for traders who wish to share their market experiences.

This article "Forex Trading Information: Beware of Frauds" can be found in our Foreign Exchange (FX) Markets category.

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